Flashcards in FL Commercial Paper Deck (148)
The person who signs or is identified in a note as the person undertaking to pay.
The person to whom the note is payable.
The person who signs or is identified in a draft as the person ordering payment.
The person ordered in a draft to make payment.
The person to whom the draft is payable.
When the drawee is a bank, and it is payable on demand, then the draft is a _________.
An acknolwedgement by a bank that a sum of money has been received, and a promise by the bank to repay the sum of money.
Certificate of deposit
Seller and Buyer sign a contract. Seller delivers goods to Buyer, with Buyer agreeing to pay within 60 ays. Can Seller assign this right to receive payment to X?
Seller and Buyer sign a contract. Seller delivers goods to Buyer, with Buyer agreeing to pay within 60 ays. If Seller assigns to X and the goods turn out to be defective, must Buyer pay X?
Any defense the buyer has against assignor can be raised by assignee.
The requirements for a negotiable instrument:
(2) Signed by Maker (Note) or Drawer (Draft or Check)
(4) Promise to Pay (Note) or Order to Pay (Draft)
(5) Fixed Amount
(6) In Money
(7) No Other Undertaking or Instruction
(8) On Demand or at a Definite Time
(9) To Order or To Bearer
Are conditional promises OK?
Yes, under contract law, but they destroy negotiability.
Maker promises to pay $100 to the order of Payee only if the Atlanta Braves win the World Series.
Is negotiability destroyed if the instrument simply refers to another agreement?
I promise to pay $100 to the order of Payee "in accordance with" (or "as per") the contract we signed today.
It is okay to mention the underlying contract without destroying negotiability so long as payment of the instrument is not made "subject to" or "conditioned upon" performance of the underlying contract.
Article 3 specifically provides that a promise or order will not be deemed conditional because it:
(1) Refers to another writing for a statement of rights regarding collateral, prepayment, or acceleration;
(2) Limits payment to a particular source or fund (e.g., "I promise to pay out f the funds received from the sale of my next wheat crop");
(3) Requires as a condition to payment a countersignature by a person whose specimen signature appears on the promise or order (such conditions are common on traveler's checks).
Is an IOU negotiable?
Is an IOU a promise to pay?
Is "I wish you would pay" an order to pay?
Is "I wish you would pay" negotiable?
Does the requirement for a fixed amount apply to interest?
No. Only to principal.
Is a promise to pay 100 bales of cotton a negotiable promise?
No. It is a non-negotiable promise.
The UCC does permit a number of extra undertakings or instructions. A promise or order may contain:
(1) An undertaking or power to give, maintain, or protect collateral to secure payment;
(2) An authorization or power to the holder to confess judgment or realize on or dispose of collateral;
(3) A waiver of the benefit of any law intended for the advantage or protection of the obligor (e.g., waiver of a homestead exemption, or trial by jury, or right to notice of dishonor).
Is it O.K. to promise to pay costs of collection and attorney's fees?
A note is payable on or after a stated time or event certain to happen but uncertain as to time (e.g., "payable on my Uncle Buck's death") is it negotiable?
Not negotiable because there is no definite time for payment.
A note is payable on July 15, 2020, but provides "if my Uncle Buck dies prior to July 15, 2020, payment is due upon his death." Is this a negotiable instrument?
Yes. It is accelerated if he dies sooner.
"I promise to pay Paul."
"I promise to pay the order of Paul (or "to Paul or his order").
Negotiable. Order paper.
"I promise to pay bearer (or "to the order of bearer" or "to Paul or bearer").
Negotiable. Bearer paper.
"Pay to the order of cash."
Negotiable. Bearer paper.